Created on Tuesday, 14 May 2013
Written by AMANDA LEE MYERS,Associated Press

CINCINNATI (AP) — The former head of an Ohio computer sales company sentenced to one week in prison for inflating stock prices and losing investors millions could now face a sentence of up to 10 years — the result of a federal appeals court ruling that his first prison term was "drastically" light.

Michael Peppel, 44, is set to be resentenced in federal court in Cincinnati on Tuesday or Wednesday, depending on how long arguments from attorneys on both sides last.

Federal Judge Sandra Beckwith, who sentenced Peppel to one week in prison in October 2011 because he was "a remarkably good man," is the same judge who will sentence Peppel anew this week.

Prosecutors had recommended that Peppel get between eight and 10 years in prison and appealed Beckwith's original sentence to the 6th U.S. Circuit Court of Appeals, which ruled in February that Beckwith had abused her discretion by reducing his sentence by 99.9 percent, saying it was unreasonably short.

The court agreed with prosecutors that Peppel should face between eight and 10 years in prison, and sent the case back to Beckwith.

Beckwith still has the authority to hand down a lighter sentence than recommended.

Peppel pleaded guilty in 2010 to money laundering, conspiracy to commit fraud and falsifying financial reports in what prosecutors say was a complex and deliberate scheme to defraud millions of dollars from investors in the now-defunct, Dayton-based MCSi Inc.

Rather than tell investors that the company was struggling, prosecutors said Peppel lied, allowing the value of the company stock to remain high when he sold 300,000 of his personal shares for more than $6 million.

The scheme defrauded investors of an estimated $18 million and cost many people their jobs, court documents say.

"Mr. Peppel perpetrated a complex, lengthy scheme that, even now, continues to impact his victims," government prosecutors wrote in a May 6 filing. "While Mr. Peppel purchased property and other stocks with his windfall, his investors lost retirements."

Peppel should get 10 years in prison, prosecutors wrote, to properly punish him and deter similar crimes.

A phone number for Peppel's attorney, Ralph Kohnen, rang busy Monday and an unidentified person hung up the phone at his home number.

It's unclear what sentence Peppel and his attorneys will argue for, since Beckwith agreed to seal the request they filed.

At his original sentencing, Beckwith said she was impressed by more than 100 letters from Peppel's family, friends and others that spoke of his humble beginnings, charitable activities and how his five children, wife, mother and an ailing brother depend on him.

In handing down his one-week sentence, Beckwith noted that she saw "little benefit to be gained by incarcerating Mr. Peppel for an extended period of time," instead imposing a $5 million fine and three years of supervised release.

Peppel's attorneys had argued at his first sentencing that he already had been punished enough by being publicly humiliated by publicity over his arrest and trial, and had lost his livelihood.